Everyone wishes they had a crystal ball and knew what the future value of Bitcoin will be. Absolutely no one can promise or tell you exactly what Bitcoin will be worth at any time. What we can do is look at the shifts in the market, how other assets are doing, and models that people are using to understand Bitcoin demand and adoption. Many statistics below I believe represent more Bitcoin adoption long term will be due to the broken ways in which our system operates! I think you will be surprised at some of the below data.
Today I just want to break down a few things:
- What large institutions are thinking and saying
- What is going on in other markets like equities, bonds, real estate and more
- What on chain metrics shows in terms of adoption (great resources to follow)
Let’s dive in.
What institutions and top capital allocators are saying about Bitcoin
- Paul Tudor Jones: “The only thing that I know for certain is I want to have 5% in gold, 5% in bitcoin, 5% in cash, 5% in commodities,” said Jones. (source: yahoo finance)
- Ray Dalio: “I’d rather have Bitcoin than the bond’. Personally, I’d rather have Bitcoin than the bond,” Dalio said in a long-ranging discussion. (source: Fortune)
- Scott Minerd: “If you consider the supply of bitcoin relative … to the supply of gold in the world, and what the total value of gold is, if bitcoin were to go to those kinds of numbers, you’d be talking about $400,000 to $600,000 per bitcoin,” Minerd said. (source: Coindesk)
- Tim Draper: Believes the value will reach $250,000 by 2022. (source: CNBC)
I could go on with hundreds of sources talking about institutions and money managers, but I will stay brief. Bitcoin has been on a spree of retail adoption and growth over the last decade, and now large money managers, corporations, insurance companies, and capital allocators are taking positions. Gradually then suddenly as we say. There also seems to be weekly news coming out with banks, and other institutions leveraging partnerships with NYDIG so that they can make Bitcoin available to their customers. Be sure to follow their press releases.
The state of stocks, bonds, real estate
One of the scariest charts is the complete coordination of the S&P 500 and the Federal Reserve Balance sheet. What you will see is a complete alignment in the growth of the stock market and the expansion of the federal reserve balance sheet. (figure 1)
You should be sure to read why this happens and educate yourself on the Cantillion Effect.
The bond market is next on the chopping block. Bonds historically would return 5-6% and in recent times are now negative-yielding (which simply means when an investor receives less money at the bond’s maturity than the original purchase price for the bond) this has made value investing an irrational approach in some regards. Another scary fact is that there are $119 trillion dollars in bonds worldwide. (figure 2) When I consider the fact that money managers are in the business of creating yield, return, and results for investors, it is hard to imagine why ANYONE would invest in bonds when the rate of return is so low!
And now, we have a market I love and adore, real estate. While I am an active and passive real estate investor, I still see some of the problems that have been created in markets that continue to make the rich richer and push the middle class out of wealth-building opportunities. One key driving factor of insane price appreciation is the 30-year mortgage rate. As rates go down (which means taking out loans are cheaper, and less is due in interest each month) people are encouraged to take out more debt and therefore take on more risk. This is one reason why we are seeing massive increases in home values over the last few years, further pushing out the middle class. (another proof of the Cantillion effect, those closest to the money printer, GET RICH!)
To conclude, considering the correlation of the S&P to the Fed Balance sheet, negative-yielding bonds, and a sky-high real estate market, this leaves me thinking that stocks are overvalued, bonds have zero value, and the real estate market is in a bubble. With the global adoption of Bitcoin and the volatility that many people view as scary or not sustainable, I believe the tables are going to turn. When investors exit these assets that are all inflated due to monetary expansion, they will be focused on getting a sound and scarce form of digital money that is recognized as valuable globally.
On-Chain Metrics
The on-chain metrics of Bitcoin are what make it such incredible technology. There are some incredible thinkers and on-chain metric analysts in the space I want to leave you with. These on-chain analysts post statistics constantly on Twitter and their personal substack channels. Here are my top 2 twitter’s: Willy Woo, and William Clemente III.
Versus trying to go into detail myself, I will leave you with those 2. There are great stats they track like, total wallets holding Bitcoin in different increments (showing retail and large institutional growth) as well as hash rate (security of the network) and stats about the decentralization of the network, and other metrics that give us an idea as to why things happened in the past, and what we can expect in the future. While not always great measurements of short and medium-term price predictions, it is another lens through which you can analyze Bitcoin adoption and the value of the network.
Final thoughts
I have zero faith in this kicking the can method we have seen over the last few decades. I believe that technology is deflationary as Jeff Booth has illustrated. I also believe that the rest of the world is waking up to the fact that mathematically, probable, and verifiable monetary policy is better than what these insider trading politicians have done. If we hold the world accountable, objectively, the world will thrive. What will Bitcoin be worth in the future? I personally think we completely underestimate what we think it will be worth in the future. Stay humble, and stack sats.